Key rail franchise ruling delayed

THE rail industry was thrown into further disarray today when the Government found itself unable to award a long-term franchise to run a key London to Scotland route.

Present operator GNER and Sir Richard Branson's rail company Virgin Trains had been competing in the hopes of getting a 20-year franchise to operate the 400-mile East Coast main line route.

But saying that more work was needed to sort out the upgrade of the line, Transport Secretary Stephen Byers merely announced a two-year extension of GNER's present franchise until April 2005.

Passenger groups and train companies expressed disappointment with the decision which ended months of speculation about the key route.

The Association of Train Operating Companies said the two-year ruling had 'created great uncertainty within the industry', while the Rail Passengers Council said the decision reflected 'the underlying problems of funding and structure of the railways'.

Virgin Trains said it was disappointed there had not been a clear commitment to the replacement plans of either bidder. However the Byers' decision means that Virgin, and other interested companies, can bid for a possible long-term contract when the GNER franchise comes up for renewal in 2005.

In making his ruling today, Mr Byers was going against a recommendation by the Strategic Rail Authority that a 20-year franchise should be awarded on the route.

It is believed that the SRA had come down in favour of GNER in its recommendation, although no official statement on this was made today.

Announcing his decision, Mr Byers said he was inviting the Strategic Rail Authority to seek new benefits for passengers by negotiating to extend the existing GNER franchise until April 2005.

'I regret that the process to negotiate a new 20-year deal has not proved successful.' He said. 'But since (the) Hatfield (crash) it has become clear that a lot more work has still to be done to develop this major infrastructure upgrade (on the East Coast line).'

He said that the SRA believed this work could take up to two years and in the meantime something needed to be done now for passengers 'on this popular but overcrowded route'.

The initial benefits to be negotiated on the route include a London-Leeds service every 30 minutes, possibly as early as 2003 and early placement of orders for a new fleet of intercity trains.

Mr Byers said passengers on the East Coast route 'have had a difficult time since Hatfield and deserve better'. He added: 'GNER has been widely commended as one of the best train operators and I hope they can work with the SRA to deliver benefits to passengers.

'I am not ruling out a 20-year franchise for the line. But circumstances have changed completely since bids were first invited for this particular franchise. The second stage of the East Coast main line upgrade does not yet have a finalised design or cost, and is not due for completion until 2006 at the earliest.'

Mr Byers' decision today, which ends months of speculation about the East Coast line's future, follows his request earlier this week to the SRA to go for short-term franchises rather than long ones on some routes.

This so-called quick-fix approach has been attacked by some as being too short-term and not the right climate in which private investors will want to pour money into the railways.